Finance minister Enoch Godongwana hit all the right notes in his address to the Sunday Times investment summit last week. He cut through the noise that so often deflects attention from the real issues to present a blueprint of five priorities, with the underlying goal stated as: “We have got to make it really easy to do business.”
I hope that message gets heard across all corners of the government.
“Let’s not talk Eskom, let’s talk security of supply,” he said of his first priority. That’s a refreshing perspective; it enables a holistic assessment of the entire energy sector and recognises Eskom is an important component but not the whole story. It prioritises what matters: energy security. His second priority, broadband spectrum, he wants resolved “as a matter of urgency”.
For his third priority, the green revolution, he again took a holistic view, saying: “It is a mistake to think we will put this all on to Eskom. We have got to talk about the green economy as a nation and across all sectors.”
Addressing the country’s logistical issues was his fourth priority, and the fifth was to make it easy to do business. On the latter, again, his perspective was refreshing. “We have got to find a way between ourselves and business, not only to work together on public infrastructure, but also to help business with the normal day-to-day business to invest and remove all the obstacles which impact on them.” He acknowledged that the business environment is not conducive to investment, dismissing claims of an investment strike by businesses.
One area where Godongwana can make a quick and painless impact is in accelerating processes to remove red tape, particularly for the small business sector, which has been devastated by the Covid-19 pandemic. The health of our small businesses is crucial for our growth and employment prospects. Lifting the self-generating electricity licence cap to 100MW was a big move at a high level that had a big effect, but we need numerous similar moves at lower levels where needless bureaucratic processes can be eliminated.
There are many other areas where the minister can implement his ease-of-business motto. The business sector is overregulated and labour legislation is a significant impediment to employment.
I think Godongwana’s messaging is spot on. The important thing, however, is to see these stated goals realised in the medium-term budget policy statement, scheduled for November 4. That will be his first test of whether he can turn these goals into reality.
I’m sure the minister is well aware that it will be no simple task. He will face opposition from within his own party and other quarters, as did his predecessor.
History has taught South Africans not to get excited by plans or policies but to focus resolutely on implementation, and here the governing party is undergoing a thorough examination. Can it successfully implement the important elements of the Economic Reconstruction and Recovery Plan? The stakes are high and the consequences of failure will result in an economy that is simply unable to grow at the pace necessary to even start denting our unemployment crisis.
The reform process has had early successes but is happening too slowly, and in far too many areas there are setbacks, including legal ones (as is the case with the spectrum auction and the emergency Risk Mitigation Independent Power Procurement Programme), political blockages or outright corruption.
The problems with implementation range from top to bottom of government. Local government is in an abysmal state. Auditor-general Tsakani Maluleke told parliament in June that 27% of municipalities face significant doubts about their ability to continue as a going concern. Another alarming fact is that only 2% of revenue is spent on maintenance, with 46% going to salaries and council remuneration.
Far too many municipalities are failing to provide basic services to residents, yet with municipal elections looming, we’re hearing many grandiose promises from politicians across the political spectrum.
We need to get the basics right. We need to ensure every household has water and electricity; that financial management at every municipality is up to standard; and that potholes get repaired.
In a nutshell, every municipality should deliver the services it is supposed to, with its spending priorities aligned towards that goal. Efficiently functioning municipalities are important to localised economies. We can’t have more situations such as food producer Clover closing its cheese factory in Lichtenburg because of poor service delivery, with water and power outages repeatedly disrupting operations.
Of course, these are some of the many things politicians are promising as they campaign for our favour because these are issues that are important to everybody; these issues affect people’s lives directly. Outside of the election cycle, the conversation on basic delivery tends to go quiet. But it is one we must continue having all of the time to ensure delivery across government, from the policy reform the finance minister is calling for to the basic management of local government the auditor-general is highlighting.
• Mavuso is CEO of Business Leadership SA.
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